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ACGA joins coalition calling for restoration of competition and fairness to livestock/poultry markets

(Wednesday, Jan. 15, 2003 -- CropChoice news) -- The American Corn Growers Association (ACGA) has joined a broad based coalition of cattle, hog, poultry, consumer, rural, and other groups are asking Congress to take seven specific steps to address market concentration, restore livestock market competition, and impart fairness in agricultural production and marketing contracts. A letter signed by 127 organizations was delivered to members of Congress today. The letter describes the dismal condition of today's markets and presents a blueprint for strengthening the vitally important livestock and poultry production sectors.

Keith Dittrich, President of ACGA, a member of the coalition, said, "We join in this important coalition not only because the producers in livestock sector are corn farmers best customers, but because these measures are critical for the survival of the free enterprise system of this nation. The free enterprise system relies on competition and to have true competition we must have competitors."

As a blueprint for remedying the anticompetitive forces prevalent in today's livestock and poultry markets, the groups are asking Congress to enact the following legislation that was introduced but not passed during the last congressional session: 1) Ban on ownership of livestock by the biggest packers; 2) Producer Protection Act to establish minimum contract standards; 3) Transparency / minimum open market bill to prevent open, competitive markets from completely disappearing; 4) Captive Supply Reform Act to make livestock marketing contracts open and competitive; 5) Clarify the meaning of undue preferences to clarify that preferential pricing, paying different prices to different producers for livestock, is justified only for real differences in product value or actual and quantifiable differences in acquisition and transaction costs; 6) Close the poultry loopholes in the Packers & Stockyards Act to give USDA the authority to bring administrative actions against poultry dealers; and 7) Bargaining right for contract producers to close loopholes in the Agricultural Fair Practices Act of 1967 and to require processors to bargain in good faith with producer organizations.

"Our country's farmers and ranchers are asking for nothing more than a fair market and a competitive share of the $900 billion that consumers insert into the food and agriculture economy annually," concluded the letter.

The letter explained that the ongoing vertical and horizontal integration of the livestock and poultry industries is circumventing the nation's goal of maintaining a diverse, farm- and ranch based production sector that provides consumers with nutritious and affordable food. Instead, the groups said industry integration is driving farm-gate prices down below competitive levels and consumer prices above competitive levels. The letter also described how market power exerted by the meat packing industry is being misinterpreted as efficiency. If meat packers were gaining efficiencies, the price spreads from farm-to-wholesale would narrow. But, since 1994, the spread for beef increased by 50 percent and for pork, 43 percent. In poultry, the spread increased by 193 percent since 1990. The groups said these widening spreads are not a function of efficiency, "The cause of the increased spreads is market power," they asserted.

The groups' letter notes that market power by processors and integrators can also lead to "non-price" harm to producers through abusive contracts, as has been experienced by hog and poultry producers. "Contracts are drafted by the packers and offered to farmers on a take-it-or-leave-it basis," asserted the coalition. "Farmers are faced with either signing the contracts or declaring bankruptcy for lack of a contract. The contracts increasingly take rights from farmers, and shift risk from the companies to the farmers."

For a complete copy of the coalition's letter to Congress, go to www.acga.org. The American Corn Growers Association represents 14,000 members in 35 states.

Click the following link to see the competition letter: